<PAGE> 1
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SECOND BANCORP
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXX
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
<PAGE> 2
SECOND BANCORP, INCORPORATED
108 Main Avenue, S.W.
Warren, Ohio 44481
April 1, 1996
NOTICE OF ANNUAL SHAREHOLDERS MEETING
TO THE SHAREHOLDERS OF SECOND BANCORP, INCORPORATED:
Notice is hereby given that the Annual Meeting of Shareholders
of Second Bancorp, Incorporated, will be held in the Directors Room of The
Second National Bank of Warren, 108 Main Avenue, S.W., Warren, Ohio, on
Tuesday, May 14, 1996, at 1:30 P.M. for the following purposes:
1. To fix the number of directors at seven (7).
2. To elect four (4) directors of the Corporation to
serve until the 1998 Annual Meeting of Shareholders
or until a successor is elected and qualified.
3. To ratify the appointment of Ernst & Young LLP as the
independent Certified Public Accountants of Second
Bancorp, Incorporated.
4. To transact such other business as may come before
the meeting or any adjournment thereof.
The close of business March 15, 1996, has been fixed by the
Board of Directors as the record date. Only those shareholders of record on
that date are entitled to notice of and to vote at the meeting.
WHETHER OR NOT YOU CONTEMPLATE ATTENDING THE ANNUAL
SHAREHOLDERS MEETING, THE BOARD OF DIRECTORS URGES YOU TO SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE BY
NOTICE IN WRITING DELIVERED TO THE SECRETARY OF SECOND BANCORP OR BY EXECUTION
OF A LATER DATED PROXY. IF YOU DO ATTEND THE MEETING, YOU MAY WITHDRAW YOUR
PROXY AND VOTE IN PERSON.
A proxy statement is submitted herewith.
Christopher Stanitz
Secretary of Second Bancorp, Incorporated
<PAGE> 3
SECOND BANCORP, INCORPORATED
108 Main Avenue, S.W., Warren, Ohio 44481
April 1, 1996
PROXY STATEMENT
The Annual Meeting of Shareholders (the "Annual Meeting") of
Second Bancorp, Incorporated ("Second Bancorp", the "Company, or the
"Corporation"), will be held Tuesday, May 14, 1996, at 1:30 P.M. in the Board
of Directors Room at the Main Office of The Second National Bank of Warren
("Second National" or the "Bank"), 108 Main Avenue, S.W., Warren, Ohio. This
Proxy Statement is being mailed on or about April 1, 1996.
Only those shareholders of record at the close of business
March 15, 1996, will be entitled to vote.
The solicitation of proxies will be made by mail except for
any incidental solicitation by officers and representatives of Second Bancorp
and of its subsidiary by personal interviews, by telephone, or by telegraph.
Second Bancorp will bear the cost of the solicitation of proxies, and it may
reimburse brokers and others for their expenses in forwarding solicitation
material to beneficial owners of Second Bancorp.
COMMON AND PREFERRED STOCK OUTSTANDING
As of the record date for the Annual Meeting there were
2,664,411 shares of common stock and 611,766 shares of preferred stock
outstanding, of which 2,499,897 shares of the common and 604,221 shares of the
preferred are entitled to vote. The remaining 164,514 shares of common and
7,545 shares of the preferred are held by Second National, the wholly owned
subsidiary of Second Bancorp, in certain capacities as a fiduciary and cannot
be voted.
The general corporation law of Ohio provides that if notice in
writing is given by a shareholder to the president, a vice president, or
secretary of the Corporation, not less than 48 hours before the time fixed for
holding the meeting, that the shareholder desires the voting at such election
to be cumulative, and an announcement of such notice is made upon the convening
of the meeting by the chairman of the meeting, or by or on behalf of the
shareholder giving such notice, then each shareholder shall have cumulative
voting rights in the election of directors. Proxies solicited by the Board of
Directors will be voted cumulatively, if necessary. For all other purposes,
each share is entitled to one vote.
<PAGE> 4
SECURITY OWNERSHIP
As of the record date, there are no persons, or "groups" as
the term is used in Section 13(d)(3) of the Securities and Exchange Act of
1934, who own of record beneficially more than five percent of any class of
Second Bancorp's voting securities. The following table indicates the number
of shares of Company common and preferred stock owned beneficially by all
Second Bancorp directors and officers as a group as of the record date.
<TABLE>
<CAPTION>
Name of
Beneficial Amount of and Nature Percent
Title of Class Owner of Beneficial Ownership of Class
- -------------- ---------- ----------------------- --------
<S> <C> <C> <C>
Common stock Second Bancorp's 86,977.96 shares(1) 3.264%
officers and directors
as a group
Preferred stock Second Bancorp's 7,250 shares(1) 1.185%
officers and directors
as a group
</TABLE>
Under Securities laws of the United States, Second Bancorp's
directors, its executive (and certain other) officers, and any persons holding
more than ten percent of any class of Second Bancorp security are required to
report their ownership of Second Bancorp securities and any changes in that
ownership to the Securities and Exchange Commission and to Nasdaq on a timely
basis. Second Bancorp is required to report in this Proxy Statement any
failure to make the necessary filing as and when due. In making the following
statement, Second Bancorp has relied on the written representations of its
incumbent directors and officers and copies of the reports they have filed with
the Commission. During 1995, all of the required filings were made on a timely
basis.
_______________
(1) See footnotes for directors regarding beneficial ownership. Figures include
shares deemed beneficially owned but as to which the officer or director in
question has disclaimed that beneficial ownership.
ELECTION OF DIRECTORS
Pursuant to the Articles of Incorporation of Second Bancorp,
the Board of Directors is divided into two classes, each consisting of
approximately one-half of the entire board. The directors serve staggered two
year terms, so that directors of only one class are elected at each
<PAGE> 5
Annual Meeting. At the forthcoming Annual Meeting, the shareholders will be
asked to fix the maximum number of directors at 7 and to elect 4 directors in
Class II. Each director elected at the Annual Meeting will hold office until
the 1998 Annual Meeting of Shareholders or until a successor is elected and
qualified. Except as otherwise specified in the proxy, the shares represented
by all properly executed and returned proxies will be voted for the election of
the 4 nominees named below as directors of Second Bancorp. If a nominee should
become unavailable to serve, which is not anticipated, proxies will be voted
for the election of such person, if any, as shall be recommended by the Board
of Directors.
<PAGE> 6
- -----------------------------------------------------------------------
The names of the nominees for director of Second Bancorp, together with
specific information about the nominees, are as follows.
- -----------------------------------------------------------------------
<TABLE>
<CAPTION>
Number and Percentage of
Shares Owned Beneficially
as of March 15, 1996(1)
Principal Occupation During
the Past Five Years Class A Director
Nominees Age and Directorships Common Preferred Since
- -------------------------------------------------------------------------------------------------
Class II Term Expires in 1998
<S> <C> <C> <C> <C> <C>
Alan G. Brant 64 Chairman and President, Second 29,687.49(2,3) 3,000(2) 1987
Bancorp and President, Director, (1.114%)
and Chief Executive Officer,
Second National Bank.
John A. Anderson 58 Chairman and Chief Executive 6,889 1,000 1987
Officer, The Taylor-Winfield
Corporation, manufacturer of
metal working machinery.
John C. Gibson 67 President, Jack Gibson Con- 8,248.23(4) 2,950(5) 1987
struction Company, general
contractor.
Robert J. Webster 72 Retired and past President 22,022(6) 200 1987
and Chief Executive Officer,
Denman Corporation, manufacturer
of automobile tires and rubber
rolls.
</TABLE>
_________________
(1) Unless otherwise stated, each nominee or director's percentage ownership of
each class of stock is less than 1%.
(2) Includes 4,500 shares of common stock and 3,000 shares of preferred stock
held by Mr. Brant's wife, the beneficial ownership of which he has disclaimed.
(3) Includes 9,202.49 shares of common stock held for Mr. Brant's benefit by
the Bank's Savings Plan. Mr. Brant is 100% vested in these shares.
(4) Includes 864.42 shares of common stock owned by, or for the benefit of, Mr.
Gibson's wife, the beneficial ownership of which he has disclaimed.
(5) Includes 1,950 shares which are owned by the Jack Gibson Construction
Company which company is controlled by nominee John C. Gibson.
(6) Includes 5,116 shares of common stock owned by Mr. Webster's wife, the
beneficial ownership of which he has disclaimed.
<PAGE> 7
- --------------------------------------------------------------------------------
The names of the three remaining Second Bancorp directors, together with
specific information about the directors, are as follows.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number and Percentage of
Shares Owned Beneficially
as of March 15, 1996(1)
Principal Occupation During
Class I the Past Five Years Class A Director
Directors Age and Directorships Common Preferred Since
- -----------------------------------------------------------------------------------------------------
Class I Term Expires in 1997
<S> <C> <C> <C> <C> <C>
Norman C. Harbert 62 Chairman, President, and Chief 5,556.87(2) 0 1987
Executive Officer of the HAWK
Group, owner of three manu-
facturing firms. Mr. Harbert
is also a director of Caliber
Systems, Inc.
John L. Pogue 51 Partner, Hoppe, Frey, Hewitt & 790.99(3) 0 1987
Milligan (attorneys).
Raymond John 47 President and Chief Executive 4,333(4) 0 1987
Wean, III Officer of Barto Technical
Services, Inc. Prior to
January 1995, President of
Danieli Wean, Inc., and
President and Chief Executive
Officer of Wean, Incorporated,
formerly, Wean United, Inc.,
designer and manufacturer of
industrial machinery.
</TABLE>
_______________
(1) Unless otherwise stated, each nominee or director's percentage ownership of
each class of stock is less than 1%.
(2) Includes 2,000 shares of common held by the trustee of Mr. Harbert's
defined benefit plan and 1,066.89 shares of common held in a personal trust
for his benefit.
(3) Includes 223 shares of common held in a SEP IRA account for Mr. Pogue's
benefit.
(4) Includes 495 shares owned by Mr. Wean's wife and 990 shares owned by his
minor children, the beneficial ownership of which he has disclaimed.
During 1995 there were 10 meetings of the Board of Directors.
Each incumbent director and director nominee was present for more than 75
percent of the number of meetings of the Board of Directors except Director
Wean, who attended 7 meetings. The members of Second National's Examining
(Audit) Committee are Mr. Robert C. Lewis, Jr., a director of Second National
and Messrs. Gibson, Harbert, and Wean, III. The functions of the Examining
Committee are to meet with Second National's auditors to review and inquire as
to audit functions and other financial matters and to review the year-end
audited financial statements of Second Bancorp and its subsidiary and reports
of the national bank examiners as related to Second National.
<PAGE> 8
The Examining Committee held 6 meetings in 1995. The board has no Nominating
Committee.
EXECUTIVE COMPENSATION
Under proxy rules and regulations promulgated by the
Securities and Exchange Commission, publicly held corporations are required to
disclose to their shareholders certain information concerning, or deemed
relevant to, compensation paid to its Named Officers (as defined in the next
sentence) and to present that information in tabular and graphic form. The
first table contains a summary of annual and long-term compensation for
services in all capacities to Second Bancorp and its subsidiary for calendar
years 1995, 1994, and 1993, of those persons who were, at December 31, 1995,
(i) the chief executive officer and (ii) the four other most highly compensated
executive officers of Second Bancorp and its subsidiary (the "Named Officers").
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------ ------------
Securities
Name and Underlying All
Principal Option Other
Position Year Salary Bonus Awards(2) Compensation(3)
- -------- ---- ------ ----- ------ ------------
<S> <C> <C> <C> <C> <C>
Alan G. Brant, 1995 $230,000 $86,000 3,750 $8,973
Chairman and
President of
Second Bancorp, 1994 $200,000 $80,000 3,750 $9,168
Inc., and Chief
Executive Officer,
Director, and President 1993 $195,000 $63,000 2,250 $7,215
of The Second National
Bank of Warren(1)
George R. Dovich, 1995 $119,500 $43,000 3,300 $7,605
Vice President of
Second Bancorp,
Inc., and Executive 1994 $114,500 $40,000 3,300 $5,801
Vice President and
Director of The Second
National Bank of 1993 $108,062 $32,000 2,250 $4,705
Warren
William Hanshaw, 1995 $101,000 $30,000 3,000 $3,978
Executive Officer of
Second Bancorp, Inc.
and Senior Vice 1994 $97,000 $27,000 3,000 $4,044
President of The
Second National
Bank of Warren 1993 $92,500 $22,000 2,250 $3,062
David L. Kellerman, 1995 $82,667 $34,000 3,300 $4,843
Treasurer of Second
Bancorp, Inc., and
Senior Vice President 1994 $78,000 $30,000 3,300 $3,375
and Chief Financial
Officer of The
Second National 1993 $72,000 $23,000 2,250 $1,778
Bank of Warren
Diane C. Bastic, 1995 $90,333 $26,000 3,000 $5,837
Executive Officer of
Second Bancorp, Inc.,
and Senior Vice 1994 $85,917 $24,000 3,000 $4,445
President of The
Second National
Bank of Warren 1993 $80,500 $19,000 2,250 $3,542
</TABLE>
_______________
(1) Mr. Brant also received fees in the amount of $8,400 for 1995, $4,500 for
1994 and $5,700 for 1993 in compensation for his services as a director of
Second Bancorp.
(2) Option awards for 1993 and 1994 have been adjusted to take into account a
May 1, 1995, 3-for-2 common stock split.
(3) Amounts reported for 1995 represent the sum of the Company's
contributions on behalf of each of the Named Officers under the Company's
employee savings plan ($6,930, $6,930, $3,538, $4,375 and $5,235 respectively
for Officers Brant, Dovich, Hanshaw, Kellerman, and Bastic) and executive long
term disability plan ($2,043, $675, $440, $468, and $602 respectively for
Officers Brant, Dovich, Hanshaw, Kellerman, and Bastic).
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The second table contains information on stock options granted
during 1995 to the Named Officers and their potential realizable value.
<TABLE>
<CAPTION>
Potential Realizable Value
Number of % of Total at Assumed Annual Rates
Securities Options of Stock Price Appreciation
Underlying Granted to for Option Term
Options Employees in Exercise or Expiration
Name Granted(1) Fiscal Year Base Price(2) Date(3) 5% 10%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan G. Brant 3,750 14.1% $21.125 5/22/05 $49,819 $126,244
George R. Dovich 3,300 12.4% $21.125 5/22/05 $43,841 $111,095
William Hanshaw 3,000 11.3% $21.125 5/22/05 $39,855 $100,995
David L. Kellerman 3,300 12.4% $21.125 5/22/05 $43,841 $111,095
Diane C. Bastic 3,000 11.3% $21.125 5/22/05 $39,855 $100,995
ALL COMMON
SHAREHOLDERS NA NA NA NA $35,397,750 $89,697,396
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
_______________
(1) All stock options granted to the Named Officers were granted May 23, 1995,
but are not exercisable until May 23, 1996.
(2) The base price of each option granted was equal to the mean of the bid
and ask price of the Corporation's common stock on the date the option was
granted.
(3) Notwithstanding the stated expiration date, all stock options held by an
individual terminate if that person ceases to be an employee for any reason
other than death or retirement. In the event of death or retirement, options
must be exercised by the earlier of the expiration date of the option or the
third anniversary date of the event.
<PAGE> 11
AGGREGATED OPTION/SAR EXERCISES IN 1995 AND YEAR-END OPTION/SAR VALUES
The third table contains information on the value realized by the Named
Officers during 1995 on their exercise of stock appreciation rights (SARs) and
stock options and the number and value of unexercised stock options and SARs at
year-end 1995.
================================================================================
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options and SARs at and SARs at Year-
Year-End 1995 End 19952
Shares Acquired
Name on Exercise(1) Value Realized(2) Exercisable(3) Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alan G. Brant 0 0 28,050 3,750 $473,408 $28,594
George R. Dovich(4) 1,125 $17,438 9,600 3,300 $117,431 $25,163
William Hanshaw 0 0 5,250 3,000 $ 45,983 $22,875
David L. Kellerman(5) 2,250 $24,093 5,550 3,300 $ 48,257 $25,163
Diane C. Bastic 0 0 7,050 3,000 $ 71,327 $22,875
===========================================================================================================================
</TABLE>
_______________
(1) For all SARs exercised, the number of underlying securities with respect to
which the SARs were exercised.
(2) Market value of underlying securities at exercise or year-end, minus the
exercise or base price.
(3) The number of all options and SARs granted prior to 1995 adjusted for a
3-for-2 common stock split May 1, 1995.
(4) 1,125 SARs with a base price of $6.00 per share exercised May 18, 1995,
at a 5 day average price of $21.50 per share ($17,438 value realized). All
exercised SARs were granted to Mr. Dovich under the terms of his Stock
Appreciation Rights Agreement with the Company dated June 11, 1985, as amended.
(5) 2,250 share stock option with a base price of $14.67 per share exercised
August 2, 1995, on which date the price of the Company's common stock was
$25.375 per share.
REPORT OF THE COMPENSATION AND ORGANIZATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation and Organization Committee of the Board of
Directors is a joint committee of Second Bancorp, Inc., and its subsidiary, The
Second National Bank of Warren (collectively the "Company"), and is composed of
Cloyd J. Abruzzo, John A. Anderson, and Robert J. Webster. The Committee
reviews all officer compensation levels with a view toward attracting and
retaining qualified, competent executives to
<PAGE> 12
lead the Company in its achievement of its business objectives and to enhance
long-term shareholder value.
EXECUTIVE OFFICER COMPENSATION
The Company's executive officer compensation program is
comprised of base salaries, annual discretionary cash incentive bonuses, and
long-term incentives in the form of stock option grants and, previously, stock
appreciation rights (SARs).
Base Salary. Each executive officer's salary level is
reviewed annually based upon performance of functional responsibilities,
contribution to corporate strategic goals, experience, and demonstrated
capabilities. Measurements of performance may be quantitative and/or
qualitative depending upon the context of the job under evaluation.
Annual Cash Incentive Bonus. The Company pays discretionary
bonuses to its executive officers from an incentive pool derived from a pre-set
percentage of the Company's pre-tax earnings (excluding security transactions).
The pool for 1994 from which bonuses were paid in 1995 (following independent
audit of 1994 results) was set at 3% of such pre-tax earnings. Individual
payments from the pool reflected the fact that the Company met or exceeded the
corporate goals set at the beginning of 1994, including, but not limited to,
profitability, asset growth, acquisitions, and achievement of strategic goals.
Stock Option Grants. To achieve long-term enhancement of
shareholder value, the Company has an incentive program of granting stock
options to a limited number of its key officers, including its executive
officers. Such options are granted under the Company's Stock Option Incentive
Plan at an exercise price equal to the mean of the "bid" and "ask" prices of
Second Bancorp's common stock on the date of the grant. Options are awarded
for ten year periods but are not exercisable until the first anniversary of any
grant. Grants are awarded subjectively and are currently subject to an annual
limited of 3,750 shares to any individual officer. In awarding options, the
Committee takes into consideration the same attributes that are considered in
the setting of salaries and the distribution of cash incentive bonuses.
<PAGE> 13
CHIEF EXECUTIVE OFFICER COMPENSATION
Measurements employed in determining compensation paid to Alan
G. Brant are generally similar to those applicable to other executive officers,
but also include his performance in attracting, retaining, and motivating key
management members critical to the achievement of the Company's short and long
term growth, earnings, and strategic goals. Enhancement of shareholder value
is also considered in the assessment of Mr. Brant's performance. Elements of
Mr. Brant's compensation thus set by the Committee are reviewed and approved by
remaining outside members of the Board.
The base salary and incentive cash bonus paid Mr. Brant in
1995 (as reflected in the Executive Compensation Table in this proxy statement)
were a direct and indirect reflection, in varying degrees, of (i) the Company's
progress and performance, and (ii) salaries and bonuses paid to CEOs of banking
companies similar to the Company in size and market areas.
Since stock option grants, and previously awarded stock
appreciation rights, depend upon increases in the Company's common stock price
to have value as an incentive to the recipient, such grants/awards are viewed
by the Committee as integral components of Mr. Brant's (and other key
executives') compensation arrangement. They are a highly effective tool in
directly aligning his financial interests, and the interests of the executive
team, with those of the Company's shareholders.
Cloyd J. Abruzzo
John A. Anderson
Robert J. Webster
<PAGE> 14
COMMON STOCK PERFORMANCE GRAPH
As part of the executive compensation information presented in
this Proxy Statement, the Securities and Exchange Commission requires a five
year comparison of total return to Second Bancorp common shareholders with an
appropriate broad based market index and an index of stock performance by a
peer group of publicly traded companies. The graph that follows compares
year-end total shareholder returns, assuming dividend reinvestment, for the
five-year period ending December 31, 1995, on Second Bancorp common stock with
the Nasdaq Stock Market Index (Nasdaq Market) and the Nasdaq Bank Stocks Index
(Nasdaq Banks). The Nasdaq Stock Market Index is a broad based index of total
stock return for all U.S. Companies traded on the Nasdaq National Market. The
Nasdaq Bank Stocks Index is a peer group index of total stock return for all
domestic banks traded on the Nasdaq.
[CHART GOES HERE]
COMMON STOCK PERFORMANCE GRAPH
<TABLE>
<CAPTION>
YE '90 YE '91 YE '92 YE '93 YE '94 YE '95
<S> <C> <C> <C> <C> <C> <C>
Second Bancorp $100.00 $159.96 $225.02 $315.95 $327.93 $456.67
Nasdaq Banks $100.00 $164.09 $238.85 $272.40 $271.41 $404.35
Nasdaq Market $100.00 $160.56 $186.87 $214.51 $209.69 $296.30
</TABLE>
<PAGE> 15
DIRECTOR COMPENSATION
Each director of Second Bancorp was paid $4,500 for serving on
the Board of Directors in 1995. In addition, each director was paid $400 for
each board meeting attended.
PENSION PLAN
Second Bancorp has no pension plan, but its officers are
participants in the pension plan of Second National. Second National has a
defined benefit non-contributory pension plan for all of its employees, "The
Employees Retirement Plan of The Second National Bank of Warren". Due to the
plan's fully funded status, the aggregate contribution for all plan
participants for 1995 was 0 percent of the total remuneration of the plan
participants. Remuneration for the purposes of the plan is the total of
salaries, commissions, and bonuses paid during the year as set forth above.
The retirement benefits under the pension plan are based primarily on years of
service and remuneration and take into account, among other things, the
retirement benefit paid under the Social Security Act. The normal retirement
date for the pension plan is age 65. No pension benefits were paid to the
Named Officers in 1995.
The following table sets forth the estimated annual benefits
at normal retirement age pursuant to the provisions of the pension plan to
persons in specified remuneration and year-of-service classifications:
<TABLE>
<CAPTION>
Estimated Annual Pension
for Representative Years
Final Average Remuneration of Credit Service
- -------------------------- -----------------
<S> <C> <C> <C> <C>
10 20 30 40
$ 50,000 $ 9,642 $19,284 $24,105 $24,105
75,000 14,892 29,784 37,230 37,230
100,000 20,142 40,284 50,355 50,355
125,000 25,392 50,784 63,480 63,480
150,000 30,642 61,284 76,605 76,605
175,000 30,642 61,284 76,605 76,605
200,000 30,642 61,284 76,605 76,605
</TABLE>
Officers Brant, Dovich, Hanshaw, Kellerman, and Bastic had as
of December 31, 1995, 10, 10, 6, 14, and 10 years, respectively, of completed
credited service under Second National's pension plan.
<PAGE> 16
EMPLOYEES' SAVINGS PLAN
The officers of Second Bancorp are participants in The
Employees' Savings Plan of The Second National Bank of Warren (the "Plan").
Any employee who has completed 1,000 hours of service to Second National is
eligible to participate in the Plan. The Plan provides that any eligible
employee may elect a deduction from his/her salary, ranging from 1-15% of
compensation per payroll period, the amount of which will be held by the Plan
trustee for the account of such employee. Under the Plan, Second National will
contribute to the Plan, on behalf of each participating employee, an amount
equal to 75% of the lesser of (i) the participating employee's contribution to
the Plan, or (ii) 6% of the participating employee's compensation.
Participation in the Plan is voluntary. Amounts held by the Plan trustee for a
participating employee may be withdrawn by such employee upon termination of
employment with Second National, or upon reaching the age of 59- 1/2. Amounts
set aside for a participating employee's benefit, through salary deduction,
will be invested by the Plan trustee at the participant's direction in one of
several investment vehicles -- a Money Market Fund, a Second Bancorp Stock
Fund, a Fixed Income Common Trust Fund, an Equity Common Trust Fund, or a
Growth Common Trust Fund. Second National's portion of the contribution is
invested solely in the Second Bancorp Stock Fund.
CERTAIN AGREEMENTS WITH EXECUTIVE OFFICERS
Second Bancorp and Mr. Brant are parties to a Stock
Appreciation Rights Agreement. Pursuant to the terms of that agreement, Mr.
Brant has been granted appreciation rights in Second Bancorp common stock. On
the occurrence of certain specified events, such rights would entitle him to
receive a cash payment in an amount equal to the increase in value of a share
between the date of the grant of such rights and the reference date for
payment, times the number of stock appreciation rights being exercised. Second
Bancorp and Mr. Brant are also parties to an employment agreement, a consulting
agreement, and a deferred compensation agreement. The employment agreement,
which is presently operative, sets forth the terms and conditions applicable to
Mr. Brant's service as President and Chief Executive Officer of Second
National. The term of Mr. Brant's employment agreement was extended two years
to March 31, 1999, by act of the Board of Directors May 31, 1995. The
consulting agreement, which is not presently operative, sets forth the terms
and conditions which would be applicable to Mr. Brant's rendering consulting
services to Second National in the event he ceases to hold the offices of
President and Chief Executive Officer of Second National. Under the consulting
agreement, Mr. Brant is obligated to provide consulting services to Second
National for a period of three years following the date of termination of his
employment as a result of a change in control of the Company or one year if he
is otherwise terminated (other than for cause), in return for which he will
receive his annual salary in effect at the date of termination of his
employment plus bonus and normal employment fringe benefits, during each year
in the consulting term. The deferred compensation agreement replaces a
supplemental pension agreement which provided that Mr. Brant would receive an
additional year of pension credit for every two years of service. The deferred
compensation agreement provides that Mr. Brant will receive the benefit
contemplated by the supplemental pension agreement without regard to the limits
placed on executive compensation by the Internal Revenue Code.
<PAGE> 17
Second Bancorp has entered into severance agreements with
Messrs. Dovich, Hanshaw, Kellerman, Ms. Bastic, and three other key executives.
Those agreements generally provide certain benefits to the executive if his/her
employment is terminated within one year after the date of any change in
control of the Company or if the executive resigns within that time frame as a
result of a significant reduction in job responsibilities or compensation, or
relocation of his/her job to a place more than 40 miles distant. Upon any such
occurrence, the executive will be entitled to a continuation of salary and
benefits for three years and executive job search assistance. These agreements
remain in effect through May 31, 2003, unless the executive leaves the
Company's employ voluntarily or is terminated for cause before that date.
TRANSACTIONS WITH DIRECTORS AND MANAGEMENT
All of the directors and officers of Second Bancorp and Second
National, and the companies with which they are associated, were customers of
and had banking transactions with Second National in the ordinary course of the
bank's business during fiscal year 1995 and to date. Except as disclosed
herein, loans and commitments to loan included among such transactions were
made on substantially the same terms, including interest rates and collateral,
as those prevailing at the time for comparable transactions with other
unrelated persons. Such transactions did not involve more than the normal risk
of collectibility or present other unfavorable features.
Courthouse Square Realty, a general partnership ("Realty"), is
indebted to the Bank in the amount of $1,419,336 including principal and
interest as of December 31, 1995. The principal balance on the defaulted loan
is $976,293 and interest is charged at a floating rate which, at any given
time, is equal to the Bank's prime lending rate plus three percent. Realty
borrowed the funds for the purpose of renovating a commercial office building
in Warren, Ohio. The loan was secured by Realty's leasehold interest in the
building under a lease expiring in December 2026, by an assignment of rental
income from the property and by mortgages on two adjacent properties. In
addition, one of Realty's two general partners and that partner's spouse
executed personal guaranties of the loan. Since December 1990, other than by
application of rental payments received from a tenant of the properties, no
payments on the loan have been made to the Bank. In May 1991, the Bank
obtained judgments for the amount of the loan against Realty, the guarantors,
and an entity controlled by the guarantors which had previously assumed the
loan. Those judgments were vacated by the Court in September 1992 and, after
appeal, the legal proceeding to collect the debt has been returned to the
Trumbull County Common Pleas Court for further action. The Bank estimates the
net realizable value of all collateral securing the loan to be $550,000. John
L. Pogue, a director of Second Bancorp, is the non-guarantying general partner
in Realty. The Bank has not released Mr. Pogue from his obligation on the debt
nor has it commenced any proceedings against him.
<PAGE> 18
Two of the Bank's branches are owned by John C. Gibson, a
director of the Company, or related entities. During 1995, the Bank leased its
Newton Falls branch from Mr. Gibson and J. D. Gibson at an annual lease rental
rate of $33,600. In addition, during 1995, the Bank also leased its Champion
branch from the Cousins Company, an entity 50% owned by Mr. Gibson, at an
annual lease rental rate of $40,158. The Bank continues to make monthly lease
payments to both Mr. Gibson and Cousins Company for those branches under lease
agreements expiring in 2001 and 2004, respectively.
The Bank subleases space in its main office building to
various entities including the Raymond John Wean Foundation, which subleased
office space in 1995 at an annual lease rental rate of $14,748. Raymond John
Wean, III, a director of the Company, is one of four administrators of that
Foundation.
The firm of Hoppe, Frey, Hewitt & Milligan, of which John L.
Pogue, a director of the Company, is a partner, was paid fees for various legal
services performed for the Company and the Bank in the normal course of their
business during 1995 and it is anticipated that they will continue to do so.
Legal fees (and including director fees due Mr. Pogue) paid to that firm in
1995 were approximately $135,551.35. In addition, the firm subleased space
from the Bank in its main office building during 1995 at an annual lease rental
rate of $74,820.00.
AUDITORS
The Board of Directors has appointed the firm Ernst & Young
LLP as the independent Certified Public Accountants of Second Bancorp for the
year 1996. A resolution requesting shareholder ratification of this
appointment will be presented at the Annual Meeting.
A representative of Ernst & Young LLP will be present at the
Annual Meeting and will be available to respond to appropriate questions and to
make a statement, if desired.
MISCELLANEOUS
The Board of Directors of Second Bancorp is not aware of any
matters which are to be presented at the forthcoming Annual Meeting of
Shareholders other than those specifically enumerated herein and in the notice
of the meeting.
Whether or not you expect to be present at the Annual
Shareholders Meeting, it is important that you sign and return the enclosed
proxy. If you do attend the Meeting, you may vote personally rather than by
proxy.
All shares represented by proxy in the form enclosed herein
will, in the absence of other instructions, be voted in favor of:
(1) Fixing the number of directors at 7.
<PAGE> 19
(2) Election of Alan G. Brant, John A. Anderson, John C.
Gibson, and Robert J. Webster as directors to serve
until the 1998 Annual Meeting of Shareholders or
until a successor is elected and qualified.
(3) Ratifying the appointment of Ernst & Young LLP as the
independent Certified Public Accountants of Second
Bancorp.
Management knows of no other matters to be voted upon at the
Annual Meeting. If any other matter properly comes before the Annual Meeting,
it is the intention of the persons named in the form of proxy to vote upon any
such matters in accordance with the recommendations of the Board of Directors.
The cost of solicitation of proxies shall be borne by Second
Bancorp, including the cost of preparing and mailing this Proxy Statement.
Such solicitation will be made by mail and may be by contacts made by the Board
of Directors and employees of Second Bancorp and Second National personally or
by telephone or telegram.
SHAREHOLDER PROPOSALS - 1997
In order for shareholder proposals to be considered for
presentation at the 1997 Annual Meeting of Shareholders, such proposals must be
received by Second Bancorp by December 1, 1996.
THE PROXIES ARE SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THE PROXIES MAY BE REVOKED AT ANY TIME PRIOR TO THEIR EXERCISE BY NOTICE IN
WRITING DELIVERED TO THE SECRETARY OF SECOND BANCORP OR BY EXECUTION OF A LATER
DATED PROXY. FINANCIAL STATEMENTS FOR THE LATEST FISCAL YEAR, PREPARED IN
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPALS, ARE CONTAINED IN
SECOND BANCORP'S 1995 ANNUAL REPORT MAILED TO SHAREHOLDERS WITH THIS NOTICE AND
PROXY STATEMENT. ADDITIONAL COPIES OF SECOND BANCORP'S ANNUAL REPORT FOR 1995
CAN BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST DIRECTED TO THE
CORPORATION'S SECRETARY AND SENIOR VICE PRESIDENT, MR. CHRISTOPHER STANITZ, AT
THE ADDRESS SET FORTH ON THE COVER OF THIS PROXY STATEMENT.
Christopher Stanitz
Secretary
Second Bancorp, Incorporated
<PAGE> 20
SECOND BANCORP, INCORPORATED
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 14, 1996
The undersigned hereby appoints Eugene E. Rossi, Michael Casale, and Dr. Ralph
E. Meacham, and each of them, with power of substitution, proxies to represent
the undersigned to vote all common shares and/or preferred shares of Second
Bancorp, Incorporated, owned by the undersigned at the Annual Meeting of
Shareholders to be held in the Directors' Room at the Main Office of The Second
National Bank of Warren, 108 Main Avenue, S.W., Warren, Ohio, on Tuesday, May
14, 1996, at 1:30 P.M. and any adjournment thereof, as marked on the reverse
side hereof.
The proxies are also authorized to vote upon such other business as may
properly come before the meeting.
None of the above named proxy holders are officers or employees of Second
Bancorp, Incorporated.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THIS PROXY
CONFERS AUTHORITY TO VOTE "FOR" THE PROPOSITIONS LISTED ON THIS PROXY CARD
UNLESS OTHER INSTRUCTIONS ARE PROVIDED. IF ANY OTHER BUSINESS IS PRESENTED AT
THE MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS
OF THE BOARD OF DIRECTORS. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO
EXERCISE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS.
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Fixing the number of Directors at 7. ________ ________ ________
Withhold
For Vote
2. Election of Directors in Class II to
serve a term of two years. Nominees:
Brant, Anderson, Gibson, Webster ________ ________
A SHAREHOLDER MAY WITHHOLD AUTHORITY TO VOTE FOR AN INDIVIDUAL NOMINEE
BY LINING THROUGH THE NOMINEE'S NAME LISTED ABOVE.
For Against Abstain
3. Ratifying the appointment of Ernst &
Young, LLP, as the independent Certified
Public Accountants of Second Bancorp,
Incorporated. ________ ________ ________
</TABLE>
The undersigned hereby ratifies and confirms all that said proxies, or any of
them, or their substitutes, shall lawfully do or cause to be done by virtue
hereof, and hereby revokes any and all proxies heretofore given by the
undersigned to vote at said meeting. The undersigned acknowledges receipt of
Notice of Annual Shareholders Meeting and the Proxy Statement accompanying the
notice.
<PAGE> 21
Date Signed ______________, 1996
____________________________________
____________________________________
Signature
of Shareholder(s)
Please sign exactly as name appears at left. When shares are held as
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title. If
corporation or partnership, please sign corporate or partnership name
by authorized officer.
